A Model for the Forest Sector

Kallio, M.J., Propoi, A.I., & Seppaelae, R. (1980). A Model for the Forest Sector. IIASA Working Paper. IIASA, Laxenburg, Austria: WP-80-034

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Abstract

This paper describes a dynamic linear programming model for studying long-range development alternatives of forestry and forest based industries at a national and regional level. The Finnish forest sector is used as an object of implementation and for numerical examples. Our model is comprised of two subsystems, the forestry and the industrial subsystem, which are linked to each other through the wood supply. The forestry submodel describes the development of the volume and age distribution of different tree species within the nation or its subregions. In the industrial submodel we consider various production activities, such as saw mill industry, panel industry, pulp and paper industry, as well as further processing of primary products. For a single product, alternative technologies may be employed. Thus, the production process is described by a small Leontief model with substitution. Besides supply of wood and demand of wood products, production is restricted through labor availability, production capacity, and financial resources. The production activities are grouped into financial units and the investments are made within the financial resources of such units. Objective functions related to GNP, balance of payments, employment, wage income, stumpage earnings, and industrial profit have been formulated. Terminal conditions have been proposed to be determined through an optimal solution of a stationary model for the whole forest sector.

The structure of the integrated forestry-forest industry model is given in the canonical form of dynamic linear programs for which special solution techniques may be employed. Two versions of the Finnish forest sector models have been implemented for the interactive mathematical programming system called SESAME, and a few numerical runs have been presented to illustrate possible use of the model.

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